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Chapter 2

Typical manufacturing companies waste space (factories, warehouses, offices, meeting rooms, etc.), lead time (handling times, non-process-induced buffer times, waiting times, storage times, etc.) and resources (manpower, material, energy, etc.) on a large scale. Space and lead time can usually be reduced without having to face strong headwinds. Headcount reduction is the trickiest part; therefore, the very first step is to make sure that the main objective of kaikaku – the people – is not out of sight. If you thought that the main objective of kaikaku would be money, please think again.

Enterprise of the people, by the people and for the people shall not perish from the Earth’ is what the late US President Abraham Lincoln would have said if he had been a business consultant working on restructuring and turnaround projects. Or to put it even more up to the point by quoting John Maynard Keynes, who said ‘It is enterprise which builds and improves the world’s possessions. If enterprise is afoot, wealth accumulates; if enterprise is asleep, wealth decays.

A lot is on stake if you fail to rescue the enterprise from collapsing. Therefore, take every precaution to prevent the stake- and shareholders from losing faith in you and your approach by:

1) Making sure the company’s culture allows for kaikaku. An arch-conservative culture will never, ever change radically; it will go under rather than go yonder. You cannot win them all, so let this particular chalice pass you by.

2) Nemawashi (根回し, Japanese for ‘preparing the ground for planting’), that is, coming to an agreement with the stake- and shareholders and making them see what really needs to be radically changed (which only coincidentally happens to be what they think needs to be changed). Some Caskie Stinnett-style diplomacy is needed in these situations: ‘A diplomat is a person who can tell you to go to hell in such a way that you actually look forward to the trip.’ A mutual consensus (or at least a mutual compromise) has to be written down in a master schedule, and the tasks should be broken down and allocated to the appropriate departments which will, in turn, cascade these further to each and every employee so that everyone can feel part of the taskforce team setting out to save the company. Such an agreement can also be required by law, for example in German companies, where workers’ councils have many rights of co-determination; one of these rights deals with whether management can hire a lean management consultant and implement lean management.

3) Making sure that Human resources (HR) selects the right employees to be trained, sent into retirement and made redundant, even if it takes a great deal of discussion. Let your impartiality help HR to sort the chaff from the wheat. - You do not want to be caught in a rescue mission where you have to rescue the rescuers, do you?

4) Allowing for enough time to pass for the frequent explanations to settle in. Only people who have a good grasp of what is going to happen next will help you. Once the ‘converted’ are in the majority, things will run (almost) by themselves.

5) Not fooling yourself! Change takes time. Make it clear to impatient stake- and shareholders by having them write with their non-writing hand the following sentence: ‘I’d like to withdraw £500 from my account, please.’ Have them sign it (also with their non-writing hand), then ask them whether they think they would get the cash from a bank clerk who does not know them from Adam. If they are ambidextrous, make them write with their foot.

6) Making sure that with hoshin kanri (方針管理 ,i.e. policy deployment) the show gets on the road. As soon as everyone knows what needs to be done, follow one of the leadership principles of the Swiss army: ‘Command, Check, Correct’.

How serious is the situation?

Once you have agreed with all participants on what needs radically changed, find out how fast you have to act to save the company. Below are three scenarios of a patient arriving at A&E after an accident; these scenarios work as comparisons for an enterprise in trouble. The first thing any patient arriving at A&E gets is an infusion to stabilise their circulation. Therefore, whichever scenario you find yourself in, the first step must be the evaluation and stabilisation of the internal logistics processes.

Should they be deficient, immediate action is required. One of my favourite approaches is the implementation of mizusumashis (みずすまし, Japanese for ‘water spider’; they are experienced workers with an excellent eye for detail that are able to quickly grasp complex situations). Once you are sure that raw materials, work-in-process items and finished goods are moving merrily down the value stream from one station to the next, you should continue evaluating the condition of your patient/enterprise. Here are the aforementioned scenarios:

1) The patient is bleeding, but the wounds can be attended to without much ado → the company is losing money, but cash reserves are sufficient to conduct kaikaku in an orderly manner. Key decisionmakers should be aware of what needs to be done in what time frame and where. The CQO (Chief Quality Officer) should be present at all meetings, monitoring the implementation process meticulously and surveying the kata (型 or 形, Japanese for ‘training’ or ’coaching’).

2) The patient is bleeding and panicking → the company is losing money fast and has a sizeable backlog of orders that have not been produced or delivered. Customers are threatening law suits. After a brief discussion with the interim manager or the Chief Restructuring Officer (CRO; or, by this stage, the new CEO), key decisionmakers should be asked to do what has been agreed upon in the master chart as soon as possible, without any further discussions or delays. At least one member of the Quality Management department should always be by the side of the interim manager, waiting for instructions to write procedures, processes and work descriptions. If there is time for training employees and their supervisors (including C-level management), it should be done. Even at this stage, the people in charge should try to adhere to Alexander Pope’s advice: ‘Men must be taught as if you taught them not, and things unknown proposed as things forgot’.

3) The patient is bleeding profusely, is apathetic, and a priest waits in the foyer to perform the last rites → the company has run out of cash, the suppliers, as well as the customers, have sued the company for damages caused, and the liquidator is assessing assets with the CFO. In this case, the interim manager/CRO has to divide his time between the factory and the office according to the needs of operations and of the banks, authorities, liquidators. Members of the Quality Management department should be assigned to every C-level manager in the company to make sure that the orders of the interim manager/CRO are immediately implemented. Feedback at this stage is vital. Quality Management department staff have a healthy feedback culture as have comptrollers.

Discussions and agreements about what to do and who should do it decrease logarithmically from scenario 1 to 3. Having said this, if and when scenario 3 is turned into scenario 2 or scenario 1, this process is reversed, thus turning the logarithmic curve into an exponential curve. To once again use the comparison of the patient in hospital, this means that once the patient is out of A&E, he starts questioning the further procedures of his recuperation by asking, for example, about the side effects of the blue, yellow and red pills he has to take to get better. Put plainly, as long as people are in deep shit, they will readily accept assistance to get out of their misery; as soon as they are out of the woods, they’ll start to veto your suggestions.

Let’s take a look at each scenario in reverse order. Why? Because if you successfully turn scenario 3 into scenario 2, the client usually wants you to navigate the vessel through the rapids until it reaches calmer waters. Remember, though, that usually does not mean always: clients and their employees might have had enough of you and your wiseacre ways and might even quote Professor Snape from the Harry Potter books when he calls Hermione Granger ‘an insufferable know-it-all’. Then again, the ultimate freedom in the world is the freedom to botch up your life as you please without having someone tell you that you are just doing that.

A word of caution to the client:

Most interim managers are capable of leading a company through scenarios 3 to 1, even of staying on for scenario 0, which would mean that the interim manager converts to a permanent, C-level employee. However, interim managers have their preferences: some need the adrenaline kicks offered by scenario 3 and are grossly annoyed that discussions with management, stake- and shareholders intensify on the way to scenario 1. Others are happy to get scenario 3 done as quickly as possible so that they can establish some sustainable measures that will keep the company out of harm’s way, at least for a while. For best results, ask the interim manager where his preferences lie. They might even tell you beforehand because usually, these people chose this particular career path because they wanted to rid themselves of the political scheming often prevalent in companies.

Whichever scenario the company is in, here are some cure-alls that interim managers and DIY management teams can always apply:

1) Find solid ground in the quagmire of a company in crisis

2) Draw up a concise priority list with a company scope and not with a department scope

3) Demand self-discipline and prohibit procrastination form the participants

First, look for ‘solid ground’ (in both sense of the word: stable platform and your personal best field of expertise) to start at; the lower in the value stream this solid ground is, the better. Moving upstream has the advantage that you do not have to look for junk – you meet it head on. Shipping is an ideal place to start because this is the point where your value-added goods leave the factory. The best-case scenario at this point is for shipping’s only task to be loading lorries provided by customers and handing over freight documents. If the shipping department also has to manage other things, like ordering lorries or looking for the best transport route, or even if it has its own fleet of lorries to deliver goods, things become trickier. Why? Because the solid ground just turned into a shaky ground. To elaborate, my assumption is, quite distrustfully, that no departments in the company operate to a high enough standard. Therefore, the less influence that any department has on a procedure or process, the better. Of course, in this example, I am assuming that the customer is better organised – but you have to believe in something working right, don’t you? If shipping has too much elbow room to push orders to and fro, disaster can occur. In this instance, you should find your fix point at the last department in the value stream: after-sales. They cannot influence deliveries because the customer has already received the goods. If the customers are not amused about what they have received, ask the people in the after-sales department to give you the three most annoyed customers, and, just as a comparison, the happiest three customers. Start to make the annoyed customers happy again by swimming up the value stream and eliminating all the junk (quality issues, faulty orders, below standard raw materials, overly long buffer times and so on) that comes your way.

Now, the second panacea is to ask for or create a priority list. Hint: priority lists can be long, but they are never allowed to be broad. You can read more about priority lists later, but here is a brief summary. Priority lists must live up to their names; on top should be the most important to-do, followed by the second-most-important to-do and so on – it sounds simple enough, but priority lists can be hard to create. Take your time in preparing the priority list. Make sure that the priorities are the priorities of all departments, not just the priorities of the most vociferous department (such as the sales department). A priority list is neither a fleeting star nor a flash in the p(l)an: it is meant to last for at least (and here I sound revoltingly mellow) the top five priorities on your list (in my younger years I would have demanded ‘the top 10’). Once a topic on the priority list has been completed the next highest priority moves onto this august position. There might be acceptable circumstances beyond the scope of your influence that force you to cease proceedings on your top priority; then, of course, you have to start with the next feasible item on the list. Having said that, make sure the circumstances are really beyond your scope of influence: procrastination is a willing bedfellow.

Finally, demand self-discipline and prohibit procrastination. Without tenacity, persistence and determination, you will fail. There are always ‘good’ reasons for giving up or giving in. Do not change course when the wind starts to blow harder. Without an unyielding determination to succeed where others might fail you will not be able to master the task ahead. After a while persistence and determination become contagious and you will get more and more helping hands. Once you reached the ‘critical mass’ – more people believe in the success of the undertaking than are certain of its failure – the momentum will carry you forward.

Although I find above three cure-alls to be a complete list, I debated with myself about whether to add a fourth, like ‘leadership’ – but that one is really hackneyed. As is ‘coaching’… What I mean to say is: do whatever you do selflessly for the company and its grassroots employees. Try to share as much as possible not only of your expertise but also of your life experiences. Maybe the tenets of Dale Carnegie’s How to Win Friends and Influence People can help you here. – It points out the importance of respect (address everyone by their name, let them voice their opinions without telling them that they are wrong, appreciate the contribution of others and so on) and encouragement (smile, appeal to the higher motives of task ahead, give people a good reputation they can live up to and so on).

KAIKAKU: Ups & Downs

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